I recently received an offer of Analyst from a low-billion asset manager with a and I would appreciate help in assessing it because I have worked mostly abroad and am not certain on how comp works in AM in the US.
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I would be careful posting such details on a public forum - there are only so many funds raising at a given time in this size; especially with disclosed comp and rev share agreements.
You are correct in that most, if not all of your incentive lies in the Rev Share agreement. I have worked at an US Based, European Asset Manager where we launched two new funds and did not offer a rev share agreement to the PM assuming the role; as it was considered a privilege to run the fund. He was granted the right to place capital indefinitely in the fund with zero fees; but also granted a raise in comp (base+bonus). As AUM in the fund grows, he will be compensated directly by the firm, but not on a formulaic agreement.
The rate at which AUM will grow depends entirely on the underlying fund product and performance. If the firm has other strongly performing funds, they will likely cross-sell existing investors into the new fund with a reduced fee incentive (low or non-existent fees in exchange for assets) for the first few years. The fund will likely have to outperform for the first 1.5 years before it will be successfully marketed - fees on institutional money are already reasonably low in most products, and investors have a wealth of places to park their capital before considering a start-up fund.
Know that your funds' AUM fundraising efforts is likely dependent on market cycles; if the current market cycle is trash for your product, investors will likely not allocate even if your performance is strong against the benchmark. There are exceptions to this, but it would depend entirely on the asset class.
Even if you shoot the lights out your first 1-2 years, I would not expect to see significant gains from the revenue share agreement until years 3-5 when regular, fee-paying investors show up. Even then, at +50-100bps for a institutional investor, and subtracting out distribution and fund expenses, there is not too much revenue until the fund grows to $50-$100mm. Look at one of your fund's prospectuses and calculate the rate for institutional money. If you are lucky, one of your salespeople will bag a large pension fund or institution for $20mm (seen this happen), but I would not count on this.
Happy to elaborate more on this process.
Thanks for the reply. I have altered the information above to reduce the detail I provided based on your advice.
With respect to your take, it appears that it will be tough-goings the first two years. The biggest worry is that I have educational loans that I have to pay off along with family obligations. I'd prefer a higher base and sign-on with a smaller revenue percentage.
Overall, do you think this is a good compensation package? And, why?
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